Experts: Housing not ready for comeback

WASHINGTON, Jan. 3 (UPI) -- The U.S. housing market is not likely to change abruptly in 2012, economists and industry analysts said.

"I think there may be a little bit of an uptick in units sold," in 2012, Doug Duncan, vice president and chief economist at the Federal National Mortgage Association, said.

However, Duncan said, that small gain would be offset by home prices that would "probably be down again, so the total dollars spent on purchases is likely to be pretty close" to what was spent in 2011, the Los Angeles Times reported Tuesday.

Mortgages signed in 2011 totaled $1.3 trillion, down from 2010, when $1.7 trillion in mortgage contracts were signed, as the market remained stubbornly sluggish despite historically low interest rates.

With unemployment high, credit tight and resale values of homes going down, consumers were simply unable to take advantage of high levels of affordability.

Consumers mostly stood on the sidelines, while interest rates for 30-year loans fell under 4 percent.

By comparison, the average interest rate in the early 1980s was more than 16 percent. In 2000 it was above 8 percent and in 2011 the average rate was 4.45 percent, said the Federal Home Loan Mortgage Corp., which is known as Freddie Mac.

"Remarkably low rates are not enough" to overcome the "lack of equity in their properties, poor credit and a weak job market," said Michael Fratantoni, an economist for the Mortgage Bankers Association.